AudioCodes(US:AUDC)2022-05-02 18:20Financial Data and Key Metrics Changes - Revenues for Q1 2022 were $66.4 million, an increase of 12.8% from $58.8 million in Q1 2021 [10] - Services revenues were $27.5 million, up 26.2% year-over-year, accounting for 41.5% of total revenues [10] - GAAP gross margin for the quarter was 66.9%, down from 68.4% in Q1 2021 [11] - Non-GAAP gross margin was 67.2%, compared to 68.7% in Q1 2021 [11] - Net income for Q1 2022 was $8.6 million or $0.26 per diluted share, compared to $10 million or $0.29 per diluted share in Q1 2021 [11] Business Line Data and Key Metrics Changes - The Enterprise business grew over 15% year-over-year, accounting for roughly 85% of total revenues [13] - Unified Communication and Collaboration (UCC) business grew over 20% year-over-year, with Microsoft business growing above 25% [14] - Customer Experience (CX) segment declined 8.5% year-over-year, primarily due to tough comparisons from the previous year [15] Market Data and Key Metrics Changes - Revenue by geographical region: North America 48%, EMEA 34%, Asia-Pacific 14%, Central and Latin America 4% [10] - The addressable market for voice services is expected to reach $72 billion by 2025 [22] Company Strategy and Development Direction - The company aims to be the most interoperable communications platform as a service (CPaaS) for voice services, focusing on the enterprise segment [22] - The strategy includes expanding the voice platform and upselling Conversational AI applications into UCC and CX verticals [25] - The company plans to accelerate its transition to subscription services via AudioCodes Live, expecting to double its managed services revenue in 2022 [16] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain issues and maintaining strong business fundamentals [19] - The company anticipates a stabilization of supply chain costs by the end of the year, with improvements in gross margins expected in the second half of 2022 [62][70] - Management remains optimistic about the growth opportunities in the UCC market and the strategic vision for the company [43] Other Important Information - The company acquired 720,000 ordinary shares for approximately $20.9 million during the quarter [12] - Deferred revenues as of March 31, 2022, were $76.8 million, up from $71.6 million a year earlier [10] Q&A Session Summary Question: What was the exact impact from Russia on the business in the quarter? - The impact was mainly in the CX market, where a large deal was deleted, leading to low revenues compared to Q1 2021 [46] Question: Can you talk about the attach rates for applications into the Microsoft ecosystem? - The company is focused on cross-selling additional services once they penetrate accounts with their core offerings [48] Question: Any specifics around how Callverso has been performing? - There has been significant growth in new opportunities for virtual agent solutions, particularly in the medical and financial sectors [56] Question: Was the decline in contact center customer experience primarily attributable to Russia? - The decline was due to several factors, including the Russian market, delayed opportunities in finance, and some players losing market share [58] Question: How should we think about the shape of margin throughout the rest of the year? - The company expects residual impacts from higher procurement costs in Q2 but anticipates stabilization by the end of the year [62] Question: How is Teams performing across different geographical regions? - Teams continues to grow, with significant increases in user adoption and opportunities created [64]